GBP/USD was destroyed as sterling slid following the delivery Kwasi Kwarteng’s mini-budget aimed at supporting growth in the UK economy.
Despite a broad range of measures to help support tax payers and businesses, market choose to focus on the financial strain huge tax cuts and spending would put on the UK’s finances.
GBP/USD was down 2% at the time of writing, moving towards 1.100, a level not seen since for decades.
Kwasi Kwarteng chose to pile pressure on the UK’s finances at a time the Federal Reserve is projecting sharp interest rate hikes, causing a near capitulation in GBP/USD.
Analysts also pointed to the lack of transparency in today’s announcement, in as far as there were no forecasts on how Kwarteng’s decisions would impact growth, or finances.
“The decision not to present an independent health check on how well the country is placed to fund all this extra borrowing and all these headline grabbing giveaways has sent London markets and sterling tumbling. The pound’s fallen to its lowest level against the dollar since 1985 as big questions are asked about how expensive this gamble might really be,” said Danni Hewson, AJ Bell financial analyst.
